1111111111 insurance as investment

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CHAPTER I

INTRODUCTION

1.1 INTRODUCTION OF THE STUDY

“The Business of Insurance is related to the protection of the economic values of the

assets”.

Every human being has the tendency to save to protect him from risks or

events of future. Insurance is one form of savings where in people try to assure

themselves against risks or uncertainties of future. It is assurance against risks or

events or losses. People can save their earnings either in the form gold, fixed assets

like property or in banking and insurances. All the savings of people of a country

account for gross domestic savings. In India, although savings rate is high but people prefer to invest either in gold or fixed assets so that they can make money out of it.

Hence insurance sector is still untapped in India.



OVERVIEW OF INSURANCE INDUSTRY

1. WHAT IS INSURANCE?

Insurance is a tool by which fatalities of a small number are

compensated out of funds (premium payment) collected from plenteous. Insurance is

a safeguard against uncertain events that may occur in the future.

It is an arrangement where the losses experienced by a few are extended over

several who are exposed to similar risks. It is a protection against financial loss

arising on the happening of an unexpected event. Insurance companies collect

premium to provide security for the purpose. Loss is paid out of the premium

collected from people and the insurance companies act as trustees to the amount so

collected. These companies have proposal forms which are filled to give details of

insurance required. Depending upon the answers in the proposal form insurance

companies assess the risk and decide on the premium.

Insurance companies are risk bearers. They underwrite the risk in return for an

insurance premium. the function of insurance is to provide protection, prevent losses,

capital formation etc. hence insurance can be defined as a tool in which a sum of

money as a premium is paid by the insured in consideration of the insurer’s bearing

the risk of paying a large sum .it may also be defined as a contract wherein one party

(insurer) agrees to pay the other party (insured) or his beneficiary, a certain sum upon

a given contingency against which insurance is required.

Insurance industry commands massive funds through sales of insurance

products to large number of clients. Insurers also create liabilities and commit

themselves to compensate for losses occurring to the policyholders on future date. It

also plays an important role in process of capital formation.

2. NATURE OF INSURANCE

a) Risk sharing and risk transfer: Insurance is used to share the financial losses that

might occur to an individual or his family on the happening of specified events. The

loss arising from such events are shared by all the insured in the form of premium.

Example: suppose in a village, there are 250 houses, each valued at Rs.200000.Every

year one house gets burnt, resulting into a total loss of Rs 200000.If all the 250

owners come together and contribute Rs.800 each, the common fund would be

Rs200000.This is enough to pay to the owner whose house gets burnt. Thus the risk of

one owner is spread over 250 house owners of the village.



b) Risk assessment in advance: Insurance companies are risk bearers. They assess

the risk before insuring to charge the amount of premium.

c) Its not gambling or charity: The uncertainty is changed to certainty by insuring

property and life because the insurer promises to pay a definite sum at damage or

death. Insurance is antithesis of gambling. Failure of insurance amounts to gambling

because the uncertainty of loss is always looming. Moreover insurance is not possible

without premium. So it is different from charity because charity is given without

consideration.

d) Huge number of insured people: It is essential to insure larger number of people

or property to make cost of insurance less consequently premium would also be less.

e) Assists in capital formation: Insurance provides capital to society. Accumulative

funds are invested in productive channels.

3. SEMANTICS

1. Risk: It is defined as an uncertainty of a financial loss. It is the unintentional

decline in or disappearance of value arising from contingency.

2. Policy: It is the document which embodies the insurance contract

3. Whole life policy: It is the policy under which the amount of policy will be

paid only on death of the insured. Premiums may be payable throughout the

life or for a limited period.

4. Endowment policy: Endowment policies entitle the insured to receive the

amount of the policy on his reaching a certain age and premiums also stops. If

death occurs earlier, amount of the policy will be paid at that time and

payment of premium will also stop at that time.

5. Claim: It is the amount which an insurer has to pay against a policy.

6. Reinsurance: It refers to placing a part of the risk by an insurer with another

insurer. The object is to reduce the possible loss to be borne by the original

insurer, who pays premiums at the ordinary rates to the reinsurer. Reinsure

must pay commission to the original insurer.

7. Premium: A periodic payment made on an insurance policy.

8. Insurance penetration: It is defined as insurance premium as a share of gross

domestic product.



9. Insurance density: Insurance density is defined as per capita expenditure on

insurance premium i.e. premium per capita.

10. Actuary: The actuary is a specialist who combines an understanding of risks

and mathematical technique to develop financial products to manage these

risks, price these products. He helps in designing insurance plans and then

evaluates the financial risk of the company which it takes while selling an

insurance policy.

4. TYPES OF INSURANCE

Insurance is broadly divided in two segments, based on the nature of insurance, those

are:

1. Life Insurance &

2. Non-Life Insurance or General Insurance. It can be again subdivided into the

following categories:

a) Fire Insurance.

b) Marine Insurance.

c) Social Insurance &

d) Miscellaneous Insurance. (Health insurance, Liability Insurance etc….)

5. HISTORY OF INSURANCE GLOBAL

For now we know the meaning of insurance, different types of insurance. Now

let us know the history and reasons for and behind different types of insurance.

Insurance has existed for thousands of years. The first ever type of insurance

was Property Insurance. It became popular about 3000 BC in China. It all started

when Chinese merchants, as well as their investors, wanted to ensure that they would

see a profit from their goods that they shipped overseas. In the event that a ship was

lost at sea, an insuring partner would reimburse the owners of the ship and goods. To

pay for the loss the merchant would be sold into slavery to the insurer until the debt

was repaid. This was so because, a merchant could not afford to pay for the lost goods

or even to buy a ship unless someone invested.

Property insurance was also seen in Babylon as well. In Babylon, merchants

and investors entered into a contract, in which the supplier of money for a trade

agreed to cancel the loan if the trader was robbed of his goods. The trader who

borrowed the money paid an extra amount for this protection in addition to the usual



interest. As for the lender, collecting these premiums from many traders made it

possible for him to absorb the losses of the few. Later this contract was extended to

include provisions for a family's home and even the death of the insured, where life

insurance came into existence. Slowly this concept started to spread across other

places like Greek, Roman.

Since ancient times, communities have pooled some of their resources to help

individuals who suffer loss. Like, about 3500 years ago, Moses instructed the nation

of Israel to contribute a portion of their produce periodically for "the alien resident

and the fatherless boy and the widow."

Later the origin of credit insurance, which was included in the Code of

Hammurabi, a collection of Babylonian laws said to predate the Law of Moses. Credit

insurance means, in ancient times the ship owners obtained loans from investors tofinance their trading expeditions. In case, if a ship was lost, the owners were not

responsible to pay back the loans to the investors. The risk to the lenders was covered

by the interest paid by numerous ship owners, since many ships returned safely.

By the middle of the 14th century, marine insurance was one of the most

popular types of insurance among nations of Europe. Things changed dramatically in

the 17th century in Europe. In 1666, the Great Fire of London bought the need for fire

insurance .The Great Fire of London burned for four days and nights. It destroyed 436

acres, 13,200 houses, 89 churches (including Saint Paul's Cathedral), the Custom

House, the Royal Exchange and dozens of other public buildings. Only six people

were victims in the flames, but hundreds died from shock and exposure.

By 1688, Edward Lloyd was running a coffeehouse in London. Where,

London merchants and bankers met informally to do business. There financiers who

offered insurance contracts to seafarers wrote their names under the specific amount

of risk that they would accept in exchange for a certain payment, called premium.

These insurers came to be known as underwriters. Finally, in 1769, Lloyd's became a

formal group of underwriters that in time grew as an insurance company.

The concept of insurance developed at a fast pace with the growth of British

commerce in the 17th and 18th century. The first stock companies to engage in

insurance were chartered in England in the year 1720.

In 1735, the first insurance company in the American colonies was founded

at Charleston. Later in the year 1787, fire insurance corporations were formed in New

York. Then later in the year 1759, the life insurance corporation was started in

Philadelphia, America.



The New York fire which occurred in the year 1835 was the main reason to

draw attention to create reserves to meet unexpected losses. In the year 1837,

Massachusetts was the first state to require companies by law to maintain such

reserves. After 1840, life insurance entered a boom period.

The Workmen's Compensation Act of 1897 in Britain required employers to

insure their employees against industrial accidents. Public liability insurance, fostered

by legislation, made its appearance in the 1880s.It attained major importance with the

advent of the automobile.

Until the 1950s, most insurance companies in the United States were restricted

to provide only one type of insurance, but then legislation was passed to permit fire

and casualty companies to underwrite several classes of insurance. Many firms have

since expanded and also were responsible for many mergers.From this brief accounting of history we can see how insurance came into

existence. Fortunately for us we no longer have to sell ourselves into slavery if our car

is stolen nor we have to be scared of losses due to absence of reserves. However we

can be confident that we will be compensated for our loss. Without people wanting to

secure their investments and great tragedies throughout history we may not have

insurance as we know it today resulting in peace of mind.

6. HISTORY OF INSURANCE INDUSTRY IN INDIA

The insurance industry in India over the past century has gone through big

changes. In India this industry reveals the 360 degree turn. 360 degree turn means that

it started in India from being an open competitive market to nationalization and back

to a liberalized market again.

Insurance industry in India started as a fully private system with no restriction

on foreign participation in the Nineteenth Century. Before independence, a few

British insurance companies dominated the Market. Life insurance was first set up in

India through a British company called the Oriental Life Insurance Company in 1818,

followed by the Bombay Assurance Company in 1823 and the Madras Equitable Life

Insurance Society in 1829.All of these companies operated in India but did not insure

the lives of Indians. They were there insuring the lives of Europeans living in India.

Some of the companies that started later did provide insurance for Indians. But, they

were treated as "substandard" and therefore had to pay an extra premium of 20% or

more. The first company that had policies that could be bought by Indians with "fair

value" was the Bombay Mutual Life Assurance Society starting in 1871.



The first general insurance company, Triton Insurance Company Ltd., was

established in 1850. It was owned and operated by the British. The first general

insurance company was the Indian Mercantile Insurance Company Limited set up in

Bombay in 1907.By 1938; the insurance market in India had nearly 176 companies

(both life and non-life).

After the independence, the industry went to the other extreme. It became a

state-owned monopoly. The industry started to witness a problem like fraud. Hence

many regulations were put in place to reduce and control the problems in the industry.

After which Insurance was nationalized. In 1956, the then finance minister S. D.

Deshmukh announced nationalization of the life insurance business and then the

general insurance business was nationalized in 1972. Only in 1999 private insurancecompanies have been allowed back into the business of insurance with a maximum of

26% of foreign holding.

7. LIFE INSURANCE

After the entry of new players and increase in the penetration levels, could see

the insurance sector cross the Rs 2,00,000-core mark in business by 2010.The current

size of the sector is estimated to be at Rs 50,000 crore, which has seen a compound

annual growth rate (CAGR) of around 175 percent in the last few years.

The insurance sector, both life and non life, is likely to grow by over 200

percent, and private insurers are expected to achieve a growth rate of 140 percent as a

result of aggressive marketing technique. It added that state owned insurance

companies are likely to be 35-40 percent.

On account of intense marketing strategies adopted by the private insurance

players, the market share of state-owned insurance companies like GIC, LIC and

others has come down to 70 percent in last 4-5 years from over 97 percent. Despite

regulation, the private players are offering 35 percent rate of return to is policy

holders against 20 percent by public-sector insurers.

The industry body also noted that India’s life insurance premium is 1.8

percent as a percentage of GDP whereas it is 5.2 percent in the US, 6.5 percent in the

South Korea.



The services sector offers immense opportunities for expansion opportunities

for expansion opportunities and the rural market, also, offers tremendous growth

opportunities for insurance companies.

8. GENERAL INSURANCE

General insurance in India has been expecting growth except in some

portfolios like motor insurance, fire and engineering. These portfolios are still under

tariff- this means that premium depends on a fixed predetermined rate structure.

In India, GDS as a proportion of GDP at current prices increased from 26.1%

in 2002-03 to 28.1% in 2003-04.house hold sector continued to be the major

contributor to GDS at 24.3% in 2003-04.this can be attributed to soft interest rates

prevailing in housing sector. General Insurance has low market penetration. It is1.95% and ranks 51st. However in collection of premium it is ranked 23 rd. The ratio of

the premium collected to that of GDP is 0.58. The main reason for the general

insurance industry to perform very poorly was because of the slow settlement of

claims. Moreover the rates of claim in India were highest in the world. It was 70

percent compared to 40 percent internationally. This meant that out of 100 people

who had insured their commodities 70 claimed for a loss or damage. The main reason

for the lack of demand for general insurance is that people consider it as an

unnecessary expenditure. However it must be noted that the general insurance has

been earning consistent profits and has an efficient dividend paying record

accompanied by a steady growth in its financial resources. The industry is recognized

as one of the largest financial Institutions in the country. Some of the private players

in this sector are- ICICI – Lombard, Reliance, Royal-Sundaram, Chholamandalam

etc.



9. PRIVATE PLAYERS IN THE LIFE INSURANCE SECTOR

The different private players in the life insurance sector and their associations

with foreign companies are being given below:

COMPANY INDIAN

PROMOTER/PARTNER

FOREIGN

INSURER

TOTAL

CAPITAL

(RS MN.)

FDI

(%)

FOREIGN

CAPITAL

(RS MN.)

AMP

SANMAR

RELIANCE

GROUP(ADAG)

None 2,170 0 0

Aviva Life Dabur Aviva (UK) 4,590 26 1193.4

Bajaj-

Allianz

Bajaj Auto Allianz

(Germany)

3680 26 960

Birla Sun

Life

Aditya Birla Group SunLife (Canada) 4,000 26 1,040

HDFC

Standard

HDFC StandardLife

(UK)

2,500 18.9 470

ICICI

Prudential

ICICI Bank Prudential (UK) 10,850 26 2,820

ING Vysya Vysya Bank ING Ins.

(Netherlands)

4,400 26 680

Kotak

MahindraOld Mutual

Kotak Mahindra Bank OldMutual (South

Africa)

2,600 26 680

Max

Newyork

Max India NewYorkLife

(US)

5,000 26 1,300

Met Life J&K Bank Met Life (US) 3,550 26 920

Sahara Life

Ins. I

Sahara India None 1,000 0 0

SBI Life SBI Cardiff (France) 3,500 26 910

TATA AIG TATA Group AIG (US) 3,810 26 990Shriram Shriram Sanlam Life Ins.

Bharti AXA Bharti Group AXA(Australia)

Some of the new companies who are waiting to come in to the life insurance sector

are:

a. IDBI-FORTIS.

b. Syndicate Bank

COMPANY PROFILEBirla Sun Life Insurance Company Limited



Birla Sun Life Insurance Company Limited (BSLI) is a joint venture between the

Aditya Birla Group and the Sun Life Financial Services of Canada. It started

operations in March 2001 after receiving its registration licence from IRDA in

January 2001.

BSLI’s core strategy since inception has been to ‘create value’ for all its stakeholders.

This has been driven through innovative and customer focused products and a multi

channel distribution capability in individual and group insurance. The company

started its operations with the launch of innovative unit-linked insurance products,

being the first private life insurance company in India to do so. The company has

geared up through superior value creation and technology in fulfilling its aims to

provide multiple products and benefits, greater investment opportunities and to provide the vast investor populace in India with better liquidity and security.

The transition of the insurance industry in India from a public monopoly to a

competitive environment presents interesting opportunities both to the insurance

players as well as to the customers. BSLI plans to spot emerging trends and capitalise

on these opportunities for the benefit of its customers. BSLI aims at being a leader in

product innovation with new products designed to cater to specific customer needs.

The company has a clear thrust on investment linked insurance products and believes

in maximising investment returns for the policyholders. Its unit-linked products offer

varied investment options for policyholders to choose, based on their risk appetite.

BSLI has been fully complying with its rural and social sector obligations. Social and

rural services network of the group is being tapped for this purpose.

Its clients have already appreciated the company’s superior underwriting processes

and infrastructure. Its direct sales force of more than 60,000 high quality licensed

insurance advisors in major cities and towns in India are the company’s flag bearers.

The company’s insurance advisors have qualified for the prestigious Million Dollar

Round Table (MDRT), COT and TOT, one of the highest international honours in the

life insurance industry, in all the years of its operations.

Products

The current range of products offered by BSLI includes:



:: Flexi Life Line

:: Flexi Cash Flow

:: Flexi Save Plus

:: Flexi SecureLife

:: Classic Life Premier

:: Birla Sun Life Term & Premium Back Term Plan:: Life Companion

:: Prime Life & Prime Life Premier

:: Gold Plus

:: Simply Life

:: Single Premium Bond

:: Supreme Life

:: Children’s Dream Plan, Dream Plan

:: Birla Sun Life Insurance Gold-Plus Plan

:: Birla Sun Life Bima Kavach Yojana

:: Birla Sun Life Group Protection Solutions

:: Birla Sun Life Social Development Plan

:: Birla Sun Life Group Gratuity Plan

:: Birla Sun Life Group Superannuation Plan

:: Birla Sun Life Group Interest Credit Plan

:: Birla Sun Life Credit Guard Plan

The Aditya Birla Group

The Aditya Birla Group is India's first truly multinational corporation. Global in

vision, rooted in Indian values, the Group is driven by a performance ethic pegged on

value creation for its multiple stakeholders.

Its 66 state-of-the-art manufacturing units and sectoral services span India, Thailand,

Indonesia, Malaysia, Philippines, Egypt, Canada, Australia and China.

A US$ 6.7 billion conglomerate, with a market capitalisation of US$ 7 billion, it is

anchored by an extraordinary force of 72,000 employees belonging to over 20

different nationalities. Over 30 per cent of its revenues flow from its operations across

the world.

A premium conglomerate, the Aditya Birla Group is a dominant player in all of the

sectors in which it operates. Such as viscose staple fibre, non-ferrous metals, cement,

viscose filament yarn, branded apparel, carbon black, chemicals, fertilisers, sponge

iron, insulators and financial services.



The Group has also made successful forays into the IT and BPO sectors.

Sun Life Financial Inc

Sun Life Financial Inc is a leading financial services organization headquartered in

Toronto, Canada, operating in key markets around the world.

The Sun Life Financial group of companies and their joint ventures offer individuals

and corporate customers a diverse range of financial products and services that fall

into two principal business areas: wealth management and protection.

Throughout its international operations, Sun Life Financial has an employee base of

approximately 13,800 people plus an extensive global distribution network of career sales forces, independent agents, investment dealers and financial planners.

Tracing its roots back to 1865, Sun Life Financial Inc. and its partners today have

operations in key markets worldwide, including Canada, the United States, the United

Kingdom, Hong Kong, the Philippines, Indonesia, India and China. As of December

31, 2004, the Sun Life Financial group of companies has total assets under

management of USD 298.6 billion.

Sun Life Financial Inc. trades on the Toronto (TSX), New York (NYSE) and

Philippine (PSE) stock exchanges under ticker symbol "SLF".

Key features of the company

Birla Sun Life Insurance pioneered the unique Unit Linked Life Insurance

Solutions in India.

Within 4 years of its launch, BSLI has cemented its position as a leading

player in the Private Life Insurance Industry.

There has been focus on Investment Linked Insurance Products, supported

with protection products to maintain leadership in product innovation.

Multi Distribution Channels- Direct Sales Force, Alternate Channels and

Group offering convenient channels of purchase to customers.

Web-enabled IT systems for superior customer services

First to have issued policies over the Internet.

Corporate governance and a high degree of transparency in all business

practices and procedures.

http://www.sunlife.com/slcorp/genericpage/0,3324,bGFuZy1lbmdsaXNoX3NpdGUtc2xjb3JwX2Vudi1saXZlX3B6bi1nZW5lcmljX3NlYy0xOF9zdGF0LV9lZC1fbmF2LTMzMzgxX25hdi0zMzM4MQ==,00.html

http://www.sunlife.com/slcorp/genericpage/0,3324,bGFuZy1lbmdsaXNoX3NpdGUtc2xjb3JwX2Vudi1saXZlX3B6bi1nZW5lcmljX3NlYy0xOF9zdGF0LV9lZC1fbmF2LTMzMzgyX25hdi0zMzM4Mg==,00.html

http://www.sunlife.com/slcorp/genericpage/0,3324,bGFuZy1lbmdsaXNoX3NpdGUtc2xjb3JwX2Vudi1saXZlX3B6bi1nZW5lcmljX3NlYy0xOF9zdGF0LV9lZC1fbmF2LTMzMzgyX25hdi0zMzM4Mg==,00.html

http://www.sunlife.com/slcorp/genericpage/0,3324,bGFuZy1lbmdsaXNoX3NpdGUtc2xjb3JwX2Vudi1saXZlX3B6bi1nZW5lcmljX3NlYy0xOF9zdGF0LV9lZC1fbmF2LTMzMzgxX25hdi0zMzM4MQ==,00.html



First to have an operational Business Continuity Plan.

Strong fundamentals based on the Aditya Birla group's local insight and Sun

Life financials's global expertise.

SCOPE OF THE STUDY

•

The result of this research would help the company to have a better understanding about the consumer’s perception towards life insurance.

• The study helps the company by creating awareness about the consumers of

different ages and income levels.

• The study also enables the company to focus the consumer’s preferences and

expectations on the product which they offer.

OBJECTIVES OF THE STUDIES

http://www.birlasunlife.com/BirlaSunLife/Insurance/BSLI_MP/BSLI_AboutUs/Company_Profile/abtus_comprofile2.aspx#aditya

http://www.birlasunlife.com/BirlaSunLife/Insurance/BSLI_MP/BSLI_AboutUs/Company_Profile/abtus_comprofile2.aspx#sunlife


http://www.birlasunlife.com/BirlaSunLife/Insurance/BSLI_MP/BSLI_AboutUs/Company_Profile/abtus_comprofile2.aspx#aditya





a) To know about the various Investment alternatives that is mostly preferred by

the people.

b) To find out the important criteria that people think about before investing in a

life insurance policy.

c) To find out whether gender bias involved in investing life insurance or not.

d) To find out the awareness of Birla Sunlife Insurance among the people.

RESEARCH METHODOLOGY

Methodology is a systematic way of solving a problem it includes theresearch methods for solving a problem it includes the research methods for

solving the problem.

Type of research - Descriptive research

Data source -Primary and Secondary data

Data collection method -Interview and survey

Data collection tools -Questionnaires

Sampling universe -Erode

Sample size -100



SAMPLE DESIGN

The target population of the study consists of various respondents of

various places. This survey was done by collecting the data from the respondents.

SAMPLE SIZE

After due consultation with the company supervisor as well as with the college

guide, also keeping in mind the requirements of the company for the research, the

sample size that was found to be appropriate for the study was 100.

SAMPLING TECHNIQUE

The sampling technique that adapted to conduct the survey was ‘Convenient

Random Sampling’ and the area of the research was concentrated in the city of Erodeonly. The survey was conducted by visiting different places like colleges, corporate

offices, respondent’s home etc...



DATA SOURCE

The task of data collection begins after a research problem has been defined.

In this study data was collected through both primary and secondary data source.

A. PRIMARY DATA

A primary data is a data, which is collected for gathering information first time

and to analyze the problem. In this study the primary data was collected among the

consumers using questionnaire.

B. SECONDARY DATA

Secondary data consist of information that already exits somewhere, having

been collected for some other purpose. In this study secondary data was collectedfrom company websites, magazines and brochures.

STATISTICAL TOOLS

Simple percentage analysis, ranking method and chi square analysis are the

main statistical tool used for the study.

SIMPLE PERCENTAGE ANALYSIS

Percentage refers o a special king of ratio in making comparison between two

or more data and to describe relationships. Percentage can also be used to compare the

relation terms between two or more sources of data.

Percentage of respondents = Number of respondents * 100

Total respondents



LIMITATIONS OF THE RESEARCH

The following limitations can be pointed out from the research that I have

conducted.

a) The sample size chosen for the questionnaire was only 100 and that

may not represent the true picture of the consumer perception about the

Life Insurance sector.

b) The research got confined to the city of Ambala. The respondent

belonged only to Ambala and not others who were out of Ambala.

c) Nearly 98% of the respondent belonged to the age group of 20-50

years and only 2% were above 50 years. So, the responses and the

opinions of the experienced and aged were not available. So, the

findings may not be correct when we think about the opinion of the

elderly people about the life insurance.

d) The selection of people for the questionnaire was done on the basis of

convenient random sampling, so, there were certain cases in which the people selected did not have any life insurance policy, so they could

not give any positive feedback regarding the important criteria to be

considered before taking an life insurance policy. So, this further

reduced the actual number of respondents to 76 from 100.

e) The product offered by different companies had different options and

names in them, so at the time of comparison it became very difficult.

The parameters for comparison were also different in the selected

companies.

f) One of the important criteria that was selected by the respondents

which they consider before taking an insurance policy was ‘Company

Image’, but there was no parameter available to compare criteria like

this between the companies.



DATA ANALYSIS AND INETERPRETATION

Table-2.1

GLOBAL SCENARIO OF THE INSURANCE INDUSTRY

If we see the table-2.1 in terms of both the premium value and the total market share

of some of the leading countries operating in the Insurance sector, the following

picture emerges in front of us.

Country Total Life Premium

(in $bn.)

Market

Share inpercentage

US 517.0 26.2

Japan 375.9 19.5

UK 194.0 10.11

France 154.0 7.81

Italy 91.7 4.65

Germany 90.2 4.57

China 39.5 2.1

Taiwan 38.8 1.97

India 20.1 1.08

Others 452.8 22.07

The above table shows that US is still the leader in Life Insurance sector, closely

followed by Japan. India’s share in the global market has doubled since 2000 (0.50%)

to 2006 (1.08%), but the growth of china is the maximum from 0.79% in 2000 to

2.10% in 2006. The total premium received in life insurance sector has increased from

$ 1,521 bn. in 2000 to $ 1,974 bn. in the year 2006.



Chart-2.1

Shares of different countries in Life Insurance

Source: The Economic Times, dated – 20th July, 2006.

Table-2.2

Market share of LIC and Private Players

Market Players Market share in

percentage

Private players 28.44

LIC 71.56

Total 100

Interpretation:

LIC market share continued to decline in the period up to June 2007, it declined to

71.56% from 78.23% in the same period last year. On the other hand the market share

of the private players is continuously growing up; it increased to 28.44% from

21.77% in terms of insurance premium.

Shares of different countries in Life Insurance

517

375.9

19415491.7

90.2

39.5

38.8

80.1

452.8US

Japan

UK

France

Italy

Germany

ChinaTaiwan

India

Others



Chart-2.2

Market share of LIC and Private Players

Market share of LIC and Private Players up to

June 2007

28.44%

71.56%

Private Players

LIC



Table-2.3

Market Share among Private players

Private players Market share in

percentage

Market share

change in

percentage

ICICI Prudential 29 4

Bajaj Allianz 21 1

SBI Life 10 0

HDFC Standard 9 1

Reliance Life 9 0

Birla Sunlife 5 -1

Kotak MahindraOld Mutual

3 0

Met Life 3 1

Aviva 3 0

Tata AIG 3 1

Max New York 2 -4

ING Vysya 2 -1

Bharti Axa Life 1 0

Sahara Life 0 0

Shriram Life 0 -1

Private total 100

Interpretation:

ICICI PRUDENTIAL BECOMES THE MARKET LEADER AMONGPRIVATE PLAYERS:

ICICI Prudential strengthens its position at the top of the heap by increasing its

market share by 4% in the month of Jan 2008, followed by Bajaj Allianze with 21%

market share. These two private players contribute 50% of the total insurance market

among the private players.

Chart-2.3

Market Share among Private players



Market share among private players

29%

21%

10%

9% 9%

5%

3%

3%

3%

3%2%

2%

1%

0%

0%

5%

ICICI Prudential

Bajaj Allianz

SBI Life

HDFC Standard

Reliance Life

Birla Sunlife

Kotak Mahindra

Met Life

Aviva

Tata AIG

Max New York

ING Vysya

Bharti Axa Life

Sahara Life



Table-2.4

Sales Growth among Private players

Private players Year to year growth

in sales in

percentage

ICICI Prudential 116

Bajaj Allianz 105

SBI Life 138

HDFC Standard 88

Reliance Life 335

Birla Sunlife 152

Kotak MahindraOld Mutual

121

Met Life 125

Aviva 60

Tata AIG 100

Max New York 40

ING Vysya 74

Bharti Axa Life 362

Sahara Life 238

Shriram Life 91

Private total 119



Interpretation:

Private sector sales continued to be robust at 119% year to year (YoY), up from 118%

YoY last month. The month also saw LIC make up some lost ground by growing

faster than the system at 133% YoY. Among the larger players, Reliance, SBI Life

and Birla Sun Life continued to be the rising stars with the fastest YoY growth rates.

Chart-2.4

Sales Growth among Private players



Table-2.5

Various investment alternatives available to consumers

Let us see what are the various investment alternatives that are available to the peopleand among that which are the most preferred one. Now, from the data collected fromthe 100 respondents which were surveyed through the questionnaire, the following

representation can be made:

InvestmentAlternatives

Totalscore

Rank

Bank Deposits 6.75 I

Insurance 6.46 II

Post office 5.57 III

Gold & Silver 5.33 IV

Real Estate 5.07 V

Mutual fund 4.83 VI

Equity/Shares 3.84 VII

Public Provident

Fund(PPF)

3.78 VIII

Bond & Debentures 1.74 IX

Interpretation:

From the above table-2.5 it can be seen that ranks for theses investment

alternatives where analyzed by weighted average method. From this analyze we

found Bank Deposits is the most preferred investment alternative among the

people with the average of 6.75, secondly Insurance with the average of 6.46,

followed by other investment alternatives like Post Office (5.57), Gold and Silver

(5.33), Real Estate (5.07), Mutual Fund (4.83), Equity (3.84), PPF (3.78) and least

preferred alternative is that Bond and Debenture (1.74).we understood from this

analyze that people prefer the safe and secure investment alternatives like bank

deposits, insurance, real estates, than risky investment alternatives like bonds,

equities etc.. The reason that can be attributed for the liking of people towards

bank deposit is that people expect safety for their money they deposit even though

there is less appreciation on their deposit. Secondly insurance, may be because



that insurance provides both life cover as well as security to the holder of the

policy and also to the family members of the insurance holders. Now a days

insurance is also providing option to invest in the markets through plans like

ULIP, which gives the holder both the life cover as well as an opportunity to earn

income at the market rate. Then recently real estate is the major investment

alternative among the people particularly among Erode, this is mainly due to the

increase in land value and also good long term investment preference. Gold and

silver also good investment alternative among people due to the frequent

appreciation in the values of gold, next is that mutual fund which is also the

preferable investment alternative due to low risk on their investment, and other

alternatives which are not much preferred were equities, bonds etc. mainly due to

the risk involved in it.Chart-2.5

Various investment alternatives available to consumers

6.756.46

5.575.335.07

4.83

3.843.78

1.74

0

1

2

3

4

5

6

7

T o t a l s c o r e s

Investment Alternatives

Investment Alternative Preffered by people Bank Deposits

Insurance

Post office

Gold & Silver

Real Estate

Mutual fund

Equity/Shares

Public Provident

Fund(PPF)Bond &

Debentures

Segmentation of the respondents on the basis of certain important criteria:

Now, let us turn our attention towards the respondent who were covered under this

study. These respondents can be categorized on the basis of certain important criteria



like age group, annual income, life insurance policy holders and awareness of Birla

Sunlife Insurance in the following way

Table-2.6Age Group

Interpretation:

From this table-2.6 we can see that 50% of the respondent belonged to the age group

of below 30 years, followed by 32% who belonged to the age group between 31-40

years, then 16% of respondents belong to 41-50 years and only 2% from the

respondents belong to 51-60 years but there is no respondent from the age group

above 60.

Age Group No of

Respondent

Percentage

Below 30 Yrs31-40 Yrs41-50 Yrs

51-60Above 60 Yrs

50321620

50321620

Total 100 100



Chart-2.6

Age Group

50

32

16

2 00510

1520253035404550

R e s p o n d e n t s

Below

30 Yrs

31-40

Yrs

41-50

Yrs

51-60

Yrs

Above

60 Yrs

Age Group

Age Group

Table-2.7

Annual Income Level

Interpretations:

Annual Income Level No of

Respondent

Percentage

Below 1 Lakh1.01-3 Lakh3.01-5 Lakh

Above 5 Lakh

336043

336043

Total 100 100



From the above table-2.7 we can see that 33% of the respondents belonged to

a group which has an annual income of below 1 lakh, followed by highly 60% who

belonged to the group of annual income between 1-3 lakh, then 4% who have an

annual income between 3-5 lakh and 3% of respondent who have an annual income

above 5 lakh.

Chart-2.7

Annual Income Level

Table-2.8

Hold Life Insurance Policy

Hold life insurance

policy

No of

Respondent

Percentage

Yes

No

76

24

76

24

Total 100 100

Interpretation:

Among the 100 respondents that were taken as a sample size, 76 of them had life

insurance policy that was either taken by him/her self or it was taken by their parents

on their name, while 24 of them did not have any kind of Life insurance policy from

any company.

Table-2.9

Awareness about Joint venture between Birla and Sunlife



47%

53%

Yes

No

2.10 Important criteria before taking an life insurance

On the basics of insurance policy:

Now, let us see what criteria people consider most important before taking a life

insurance policy (the criteria for the study have been mentioned before). Here, the

highly important criterion as perceived by the people is rated as 5, if people perceived

that is only important it is rated 4, if people perceived that it can be only neutrally

important is rated as 3, then the least important criterion is being rated as 2 and if

perceived that it is not important it is rated as 1(as there are 8 criteria that have been

suggested under the research study). Here the number of respondent is only 76,

because those 26 people who do not have any life insurance policy have been

excluded from the purview of the study.

Table-2.10

Premium

Rating No of

Respondent

Percentage

54321

393133

_

51.440.83.93.9 _

Total Insurance

holdersTotal non users

Total

76

24100

100



Chart-2.11

Premium

39

31

3 30

0

5

10

15

20

25

30

35

40

R e s p

o n d e n t

5 4 3 2 1

Rating

Premium

Interpretation:

Now if we consider one of the criteria we can see that 51.4% of the respondent has

rated premium as the highly important thing that they consider before taking any

insurance policy from any company, and no body has rated it as the not important

criterion. So, it can be clearly interpreted that premium that the policy holder has to

pay to continue his/her policy plays a very important role before selecting the terms

and conditions of the policy and also the company from which the policy is to be

taken.



Table-2.12

Charges

Rating No of

Respondent

Percentage

54321

1746121

_

22.460.515.81.3 _

Total Insurance

holders

Total non users

Total

76

24

100

100

Interpretation:

Now if we consider the charges the customer has to pay to the insurance company like

Fund Management charges, administration charges etc. most of the people nearly 61%

respondent consider it as an important criterion which can dictate the terms before

deciding on whether to take the policy or not. But a few people (only 22.4% of the

total respondents), consider it to be the highly important criterion before taking the

decision on life insurance policy.

Chart-2.12

Charges



17

46

12

1 00

10

20

30

40

50

R e s p o n d e n

5 4 3 2 1

Rating

Charges



Table-2.13

Policy Term

Rating No of

Respondent

Percentage

54321

2936101

_

38.147.413.21.3 _

Total Insurance

holders

Total non users

Total

76

24

100

100

Interpretation:

The tenure of the policy i.e. the policy term depends on the policy holder but

sometimes the insurer can also influence the policy term by giving some additional

benefits on policies taken for a longer period of time or vice versa. In the study that

was conducted by us, we found out that nearly 48% of the respondents think that

policy term offered by the company is the important thing that one should consider

before taking any life insurance policy while 38.1% of the respondents think that it is

the highly important thing that one should consider before taking any life insurance

policy.



Chart-2.13

Policy Term

29

36

10

1 00

510

15

20

25

30

35

40


5 4 3 2 1

Rating

Policy Term



Table-2.14

Rider Benefits

Interpretation:

Rider benefits are the additional benefits that the insurer company provides to its

customers for attracting them. Things like accidental benefit, critical illness benefit,

and permanent disablement benefit are provided as a rider with the original policy

with a payment of some additional premium from the point of view of the customers.

According to the study nearly 42% of the respondents think that it is an important

criterion before selecting an insurance policy. On the other hand 27.8% and 23.7% of

the respondent feel it neutrally and the most important criterion, which indicates that

people are not much interested in additional benefits.

Rating No of

Respondent

Percentage

54321

1832215

_

23.742.127.66.6 _

Total Insurance

holders

Total non users

Total

76

24100

100



Chart-2.14

Rider Benefits

18

32

21

5

00

510

15

20

25

30

35

R e

s p o n d e n t s

5 4 3 2 1

Rating

Rider Benefits



Table-2.15

Bonus and Interest Paid

Rating No of

Respondent

Percentage

54321

4024822

52.631.610.62.62.6

Total Insurance

holders

Total non users

Total

76

24100

100

Interpretation:

Bonus and interest are paid by the companies to the policy holder for the policies

which are with profit policy i.e. if a person takes a with profit policy, he/she also

becomes liable to get a certain percentage of the profit that the company makes in a

certain financial year. 53% of the respondents consider it as the highly important

criterion before taking a life insurance policy and only 2.6% of respondents

considered it to not important.



Table-2.15

Bonus and Interest Paid

40

24

8

2 2

0

5

10

15

20

25

30

35

40

R e

s p o n d e n t

5 4 3 2 1

Rating

Bonus & Intere st



Table-2.16

Services (Pre and Post Sales)

Rating No of

Respondent

Percentage

54321

26351122

34.346.014.52.62.6

Total Insurance

holders

Total non users

Total

76

24

100

100

Interpretation:

While conducting the study we have met many respondents who think that many of

the companies provide them satisfactory services only till the policy is being taken by

the respondent, but after that if there is any requirement from the point of view of the

customer, the company does not pay the same attention to them as they had paidearlier. So, nearly 34% of the respondents feel that services (both pre and post sales)

provided by the company is highly important to consider before undertaking any kind

of life insurance policy.



Chart-2.16

Services (Pre and Post Sales)

26

35

11

2 2

0

5

10

15

20

25

30

35

R e s p o n d e n t

5 4 3 2 1

Rating

Services

Table-2.17

Accessibility

Rating No of

Respondent

Percentage

54321

214762

_

27.661.88.02.6 _

Total Insurance

holders

Total non users

Total

76

24100

100



Interpretation:

The term accessibility here refers to the easy availability of the facilities that the

company provides to its customers. The facilities may be regarding information about

the company and the various products offered by them, it can be made available

through internet and other media. According to the study nearly 62% of the

respondents think it is highly important, while 2.6% of them feel that it is the least

important and no respondent considers that it is not important that one may consider

before taking any life insurance policy.

Chart-2.17

Accessibility

21

47

62

00

5

10

15

20

25

30

35

40

45

50

R e s p o n d e n

t s

5 4 3 2 1

Rating

Accessibility

Table-2.18

Company Image



Interpretation:Company image also plays an very important role in influencing the decision of a

prospective customer while taking the final decision. From the study it has been found

out that nearly 54% and 32% of the people feel that it is the highly and most

important thing, which has higher influence than any other criterion that influences

one’s decision regarding taking of life insurance policy, while for 1.3% of people it

does not provide any significant importance in their decision making.

Chart-2.18

Company Image

Rating No of

Respondent

Percentage

543

21

412410

1 _

5431.613.1

1.3 _

Total Insurance

holders

Total non users

Total

76

24100

100



41

24

10

1 00

5

10

15

20

25

3035

40

45


5 4 3 2 1

Rating

Company Image

So, to conclude from the above chart-2.18, it can be said that the company image

that the policy holder has to pay for taking any life insurance policy, plays a

highly important role in influencing their decision, followed by the factors like

premium, bonus and interest paid by the company, policy term and so on. So,

those companies who are having brand image or name as well as providing all

other complementary services, have a better chance of succeeding in the life

insurance sector in comparison to other companies who are in the same field.



To further analyze the perception of the respondents about what they think as

the important criteria before taking an insurance policy, I have taken two independent

parameters, namely:

a) Age of the People.

b) Annual Income of the People.

After taking these two independent parameters, the analysis is being made to see

which age group people think what criterion is important or what is the difference in

perception among the people who have annual income which are significantly

different from each other. The number of respondents taken here is only 76 as those

people who are not having any life insurance policy have been excluded from the

purview of the study and these 76 respondents were allowed to rate the criteria

according to their importance.

(Rating 5 represents highly important,4 represents only important,3 represents

neutrally important,2 represents least important and 1 represents not important).

2.19 Criteria before taking a life insurance policy

On the basics of Age group:

For conducting the study the ages of respondents are divided into five categories,

those are as follows:

a) Less than 30 years.

b) Between 31- 40 years.

c) Between 41 – 50 years.

d) Between 51 - 60 years.

e) More than 60 years.



Table-2.20

Age Group – Premium

Age group 5 4 3 2 1 Total

Respondent

Below 30

Yrs

20(58.8%)

11(32.4)

2(5.9)

1(2.9)

_ 34(100%)

31-40 Yrs 14(53.8%)

10(38.6%)

1(3.8%)

1(3.8%)

_ 26(100%)

41-50 Yrs 7(46.7%)

7(46.7%)

_ 1(6.6%)

_ 15(100%)

51-60 Yrs _ 1(100%)

_ _ _ 1(100%)

Above 60

Yrs

_ _ _ _ _ _

Total

Respondent

41(54%)

29(38.2)

3(3.9)

3(3.0)

_ 76(100%)

Interpretation:

Now, from the above table-2.20 we can see that nearly 59% of the people who belong

to the age group of less than 30 consider premium as the highly important criterion incomparison to only 54% of the people who belong to an age group of 30-40. So,

people who have started their professional life consider more about the money that

has to be spent on the insurance policy in comparison to the people who are working

for a relatively longer period of time. Again, if we consider those people 41-50 years

who have come to the important stage of their working life, we can see that these

people also thing that the expense regarding the premium to be paid is the highly

important criteria for them because they likely to spend or save their money on

medical, education etc..



Chart-2.20

Age Group – Premium

Age group-Premium

20

14

7

0

0

11

10

7

1

0

2

1

0

0

0

1

1

1

0

0

0

0

0

0

0

0 10 20 30 40

Below 30 Yrs

31-40 Yrs

41-50 Yrs

51-60 Yrs

Above 60 Yrs

A

g e G r o u p

Respondents

5

4

3

2

1



Table-2.21

Age Group – Charges


Respondent

Below 30

Yrs

5(14.8%)

22(64.7%)

7(20.5%)

_ _ 34(100%)

31-40 Yrs 4(15.4%)

18(69.3%)

3(11.5%)

1(3.8%)

_ 26(100%)

41-50 Yrs 8(53.4%)

5(33.3%)

2(13.3%)

_ _ 15(100%)

51-60 Yrs _ 1(100%)

_ _ _ 1(100%)

Above 60Yrs _ _ _ _ _ _

Total

Respondent

17(22.4%)

46(60.5%)

12(15.8%)

1(1.3%)

_ 76(100%)

Interpretation:

Now, if we consider the different charges (like Fund management charges,

administration charges etc.) that the companies take from their policy holders, we can

see that people who are having age less than 30 years and those who belong to the

group of 30-40 years think in the same way in this matter. Nearly 15% of both the

groups consider these charges are highly important, but not as much as they consider

the cost relating to the premium they have to pay to the company.



Chart-2.21

Age Group – Charges

.

Age group-Charge

5

4

8

0

0

22

18

5

1

0

7

3

2

0

0

0

1

0

0

0

0

0

0

0

0

0 10 20 30 40

Below 30 Yrs

31-40 Yrs

41-50 Yrs

51-60 Yrs

Above 60 Yrs

A g e G r o u p

Respondents

5

4

3

2

1



Table-2.22

Age Group – Policy Term


RespondentBelow 30

Yrs

10(29.4%)

14(41.2%)

9(26.5)

1(2.9%)

_ 34(100%)

31-40 Yrs 10(38.5%)

15(57.7%)

1(3.8)

_ _ 26(100%)

41-50 Yrs 8(53.3%)

7(46.7%)

_ _ _ 15(100%)

51-60 Yrs 1(100%)

_ _ _ _ 1(100%)

Above 60Yrs _ _ _ _ _ _

Total

Respondent

29(38.2%)

36(47.4%)

10(13.1%)

1(1.3%)

_ 1(100%)

Interpretation:

The policy term mainly depends on the wishes of the policy holder, so here we can

see that only 29% and 41% of the people whose age is below 30 years, think this is

highly important criterion, but people who a little bit more experienced know that

insurer companies sometime provide extra benefits for longer policies in comparison

to policies which have a shorter span of life, that’s why nearly 39% and 58% of

people belonging to the age group of 31-40 years think that it is a highly important

criterion which affects the decision regarding insurance.



Chart-2.22

Age Group – Policy Term

Age group-Policy Term

10

10

8

1

0

14

15

7

0

0

9

1

0

0

0

1

0

0

0

0

0

0

0

0

0

0 10 20 30 40

Below 30 Yrs

31-40 Yrs

41-50 Yrs

51-60 Yrs

Above 60 Yrs

A g e G r o u p

Respondents

5

4

3

2

1



Table-2.23

Age Group – Rider Benefits


Respondent

Below 30

Yrs

6(17.6)

15(44.2%)

8(23.5%)

5(14.7%)

_ 34(100%)

31-40 Yrs 6(23%)

10(38.5%)

10(38.5%)

_ _ 26(100%)

41-50 Yrs 5(33.3%)

7(46.7%)

3(20%)

_ _ 15(100%)

51-60 Yrs 1(100%)

_ _ _ _ 1(100%)

Above 60

Yrs

_ _ _ _ _ _

TotalRespondent 18(23.7%) 32(42.1%) 21(27.6%) 5(6.6%) _ 76(100%)

Interpretation:

Mostly all the respondents of different age group are not interested in rider

benefits, nearly 42% of the age group below 30, 31-40 and 41-50 years think that

it is important ,where as only 23% of all age group think that it is highly

important. So, most of them think that rider benefits are not so important and itdoes not influence their decision in a broad way.



Chart-2.23

Age Group – Rider Benefits

Age group-Rider Benefits

6

6

5

1

0

15

10

7

0

0

8

10

3

0

0

5

0

0

0

0

0

0

0

0

0

0 10 20 30 40

Below 30 Yrs

31-40 Yrs

41-50 Yrs

51-60 Yrs

Above 60 Yrs

A g e G r o u p

Respondents

5

4

3

2

1



Table-2.24

Age Group – Bonus and Interest Paid


RespondentBelow 30

Yrs

17(50%)

8(23.5%)

5(14.7%)

2(5.9%)

2(5.9%)

34(100%)

31-40 Yrs 12(46.2%)

13(50%)

1(3.8%)

_ _ 26(100%)

41-50 Yrs 10(66.7%)

3(20%)

2(13.3%)

_ _ 15(100%)

51-60 Yrs 1(100%)

_ _ _ _ 1(100%)

Above 60

Yrs

_ _ _ _ _ _

Total

Respondent

40(52.6%)

24(31.6%)

8(10.5%)

2(2.6%)

2(2.6%)

76(100%)

Interpretation:

In this scenario we can see that the thinking of the people belonging to different

age group is quite similar, as nearly 53% of the respondents belonging to three

different age groups, namely: <30, 30 – 40 and 40 – 50, think that it is a highly

important criterion which influences the decision regarding life insurance policy

and none of the total respondent think that it is the least important criterion among

all.



Chart-2.24

Age Group – Bonus and Interest Paid

Age group-Bonus & Interest

17

12

10

0

0

8

13

3

1

0

5

1

2

0

0

2

0

0

0

0

2

0

0

0

0

0 10 20 30 40

Below 30 Yrs

31-40 Yrs

41-50 Yrs

51-60 Yrs

Above 60 Yrs

A g

e G r o u p

Respondents

5

4

3

2

1



Table-2.25

Age Group – Services (both pre and post sales)


Respondent

Below 30Yrs 11(32.4%) 15(44.2%) 5(14.7%) 2(5.8%) 1(2.9%) 34(100%)

31-40 Yrs 6(23.1%)

13(50%)

6(23.1%)

_ 1(3.8%)

26(100%)

41-50 Yrs 9(60%)

6(40%)

_ _ _ 15(100%)

51-60 Yrs _ 1(100%)

_ _ _ 1(100%)

Above 60

Yrs

_ _ _ _ _ _

Total

Respondent

26(34.2%)

35(46.1%)

11(14.5%)

2(2.6%)

2(2.6%)

76(100%)

Interpretation:

In this case, we can see that the people who belong to the age group of less than 30

years and may be taking an life insurance policy for the first time, give much

importance on services in comparison to the people belonging to the age group of 30–

40, who put more emphasize on the other benefits than services provided by the

company, the percentage is almost 23 but which is 33% for age below 30 years and

they think that it is highly important criterion.

Chart-2.25

Age Group – Services (both pre and post sales)



Age group-Services

11

6

9

0

0

15

13

6

1

0

5

6

0

0

0

2

1

0

0

0

1

0

0

0

0

0 10 20 30 40

Below 30 Yrs

31-40 Yrs

41-50 Yrs

51-60 Yrs

Above 60 Yrs

A g e G r o u p

Respondents

5

4

3

2

1



Table-2.26

Age Group – Accessibility


RespondentBelow 30

Yrs

5(14.7%)

25(73,5%)

2(5.9%)

2(5.9%)

_ 34(100%)

31-40 Yrs 6(23.1%)

16(61.5%)

4(15.4%)

_ _ 26(100%)

41-50 Yrs 10(66.7%)

5(33.3%)

_ _ _ 15(100%)

51-60 Yrs _ 1(100%)

_ _ _ 1(100%)

Above 60

Yrs

_ _ _ _ _ _

Total

Respondent

21(27.6%)

47(61.8%)

6(7.9%)

2(2.7%)

_ 76(100%)

Interpretation:

Here, we can see that not much importance is given to the accessibility criteria by the

respondents belonging to below 30 and 31-40 years, But only respondent belonging to

41-50 years nearly 67% of them consider that it is highly important, because of their

long period of working age they like to get easy availability of the products offered.

So only the age groups 41-50 years consider accessibility as an criterion for decision

to take an life insurance policy.



Chart-2.26

Age Group – Accessibility

Age group-Accessibility

5

6

10

0

0

25

16

5

1

0

2

4

0

0

0

2

0

0

0

0

0

0

0

0

0

0 10 20 30 40

Below 30 Yrs

31-40 Yrs

41-50 Yrs

51-60 Yrs

Above 60 Yrs

A

g e G r o u p

Respondents

5

4

3

2

1



Table-2.27

Age Group – Company Image


Respondent

Below 30

Yrs

17(50%)

12(35.3%)

5(19.2%)

_ _ 34(100%)

31-40 Yrs 12(46.2%)

9(34.6%)

5(19.2%)

_ _ 26(100%)

41-50 Yrs 12(80%)

2(13.3%)

_ 1(6.7%)

_ 15(100%)

51-60 Yrs _ 1

(100%)

_ _ _ 1

(100%)Above 60

Yrs

_ _ _ _ _ _

Total

Respondent

41(53.9%)

24(31.6%)

10(13.2%)

1(1.3%)

_ 76(100%)

Interpretation:

In the case of company image also, we see most of the respondents nearly 41 with

average percentage of nearly 54% consider company image as a highly important

criterion this is mainly because people feel secure and comfortable of their money

which they spend on the company which has a brand name or image. So, that

company image has greater influence among the people before they take up life

insurance.



Chart-2.27

Age Group – Company Image

Age group-Company Image

17

12

12

0

0

12

9

2

1

0

5

5

0

0

0

2

0

1

0

0

0

0

0

0

0

0 10 20 30 40

Below 30 Yrs

31-40 Yrs

41-50 Yrs

51-60 Yrs

Above 60 Yrs

A g e G r o u p

Respondents

5

4

3

2

1

So, to conclude it can be said that the thinking of people belonging to

different age group are quite different in most of the aspects whole it comes to decide

the important criterion regarding life insurance, it may be due to the fact that they

have started their career, so they worry about the money they have to spend on

insurance or it may be related to the fact that for many of the newcomers it is the first

time that they are taking a life insurance policy on their own, so they do not have

experience when it comes to life insurance in comparison to others who are having

their own policy or those who are working for a longer span of time and are quite

settled in their respective area of operation.



2.28 Criteria before taking a life insurance policy

On the basics of Annual Income Level:

For conducting the study the annual income of respondents is divided into four

categories, those are as follows:

a) Less than Rs. 1 lakh.

b) Between Rs 1.01 – 3 lakh.

c) Between Rs. 3.01 – 5 lakh.

d) More than Rs. 5 lakh.

Now, let us see the perception of people who belong to different income groups

about the important criterion before taking a life insurance policy.

Table-2.29

Annual Income – Premium

Annual

Income(Rs)

5 4 3 2 1 Total

Below 1

Lakh

13(44.8%)

13(44.8%)

2(6.9%)

1(3.5)

_ 29(100%)

1.01-3 Lakh 25(59.5%)

16(38.1%)

_ 1 _ 42(100%)

3.01-5 Lakh 1(50%)

1(50%)

_ _ _ 2(100%)

Above 5Lakh

_ 1(33.3%)

1(33.3%)

1(33.4%)

_ 3(100%)

Total 39(51.4%)

31(40.8%)

3(3.9%)

3(3.9%)

_ 76(100%)

Interpretation:

In this scenario mostly the respondents of all the annual income groups think that premium to be paid in a policy is the most important criterion (nearly 54%), eventhough the income increases it is considered to be the highly important. So, people of

all income groups put more emphasize on the money to be spent.



Chart-2.29

Annual Income – Premium

Income-Premium

13

25

1

0

13

16

1

1

2

0

0

1

1

1

0

1

0

0

0

0

0% 20% 40% 60% 80% 100%

Below 1 Lakh

1.01-3 Lakh

3.01-5 Lakh

Above 5 Lakh

A n n u a l I n c o m e

Respondents

5

4

3

2

1



Table-2.30

Annual Income – Charges

Annual

Income(Rs)

5 4 3 2 1 Total

Below 1

Lakh

10(34.5%)

11(37.9%)

8(27.6%)

_ _ 29(100%)

1.01-3

Lakh

6(14.3%)

32(76.2%)

4(9.5%)

_ _ 42(100%)

3.01-5

Lakh

_ 2(100%)

_ _ _ 2(100%)

Above 5

Lakh

1(33.3%)

1(33.3%)

1(33.4%)

_ _ 3(100%)

Total 17(22.4%)

46(60.5%)

12(15.8%)

1(1.3%)

_ 76(100%)

Interpretation:

As the charges taken by the companies is very less as compared to the premium they

take, so here we can see that people pay less importance to it. But, here also we can

see that nearly 35% of the people who are having annual income of less than 1 lakh,

think this is highly important criterion, On the other hand people who are having

income between 1.01 – 3 lakh, think that it is just an important criterion (nearly76%),

but don’t think at all that this is the highly important criterion (nearly 14%). So, here

also difference in income generates difference in opinion.



Chart-2.30

Annual Income – Charges

Income-Charges

10

6

0

1

11

32

2

1

8

4

0

1

0

0

0

0

0

0

0

0

0% 20% 40% 60% 80% 100%

Below 1 Lakh

1.01-3 Lakh

3.01-5 Lakh

Above 5 Lakh


Respondents

5

4

3

2

1



Table-2.31

Annual Income – Policy Term

Annual

Income(Rs)

5 4 3 2 1 Total

Below 1

Lakh

9(31%)

15(51.7%)

5(17.3%)

_ _ 29(100%)

1.01-3

Lakh

15(35.7%)

21(50%)

5(11.9%)

1(2.4%)

_ 42(100%)

3.01-5

Lakh

2(100%)

_ _ _ _ 2(100%)

Above 5

Lakh

3(100%)

_ _ _ _ 3(100%)

Total 29

(38.1%)

36

(47.4%)

10

(13.2%)

1

(1.3%)

_ 76

(100%)

Interpretation:

In case of policy term we can see that there is no such difference in opinion among

the people who belong to different income groups. As nearly 54% of the total

respondents think it is highly important criterion and on the other hand 31.6% of the

respondents think it is only important. The reason for the same can be that, people

who are having less income now, may have a feeling that as the time goes on their

income will increase, so they don’t put so much emphasis on policy term as compared

to the other criteria.



Chart-2.31

Annual Income – Policy Term

Income-Policy Term

9

15

2

3

15

21

0

0

5

5

0

0

0

1

0

0

0

0

0

0

0% 20% 40% 60% 80% 100%

Below 1 Lakh

1.01-3 Lakh

3.01-5 Lakh

Above 5 Lakh

A n

n u a l I n c o m e

Respondents

5

4

3

2

1



Table-2.32

Annual Income – Rider Benefits

Annual

Income(Rs)

5 4 3 2 1 Total

Below 1

Lakh

5(17.3%)

13(44.8%)

10(34.5%)

1(3.4%)

_ 29(100%)

1.01-3

Lakh

9(21.4%)

19(45.3%)

10(23.8%)

4(9.5%)

_ 42(100%)

3.01-5

Lakh

1(50%)

_ 1(50%)

_ _ 2(100%)

Above 5

Lakh

3(100%)

_ _ _ _ 3(100%)

Total 18

(23.7%)

32

(42.1%)

21

(27.6%)

5

(6.6%)

_ 76

(100%)

Interpretation:

Here, we can see that all respondents who are having income above 6 lakh think that

rider benefits are highly important criterion in comparison to people who are having

less income. The reason for the same may be as the income of a person increases he/

she will be liable to get more rider benefits in comparison to people who are having

lesser income, so they put less importance on rider benefits. But, one thing is clear

that very few people from all income class think that rider benefits do not carry any

importance.



Chart-2.32

Annual Income – Rider Benefits

Income-Rider Benefits

5

9

1

3

13

19

0

0

10

10

1

0

1

4

0

0

0

0

0

0

0% 20% 40% 60% 80% 100%

Below 1 Lakh

1.01-3 Lakh

3.01-5 Lakh

Above 5 Lakh

A n n u a l

I n c o m e

Respondents

5

4

3

2

1



Table-2.33

Annual Income – Bonus and Interest Paid

Annual

Income(Rs)

5 4 3 2 1 Total

Below 1

Lakh

13(44.9%)

8(27.6%)

6(20.7%)

2(6.8%)

_ 29(100%)

1.01-3

Lakh

23(54.8%)

15(35.6%)

2(4.8%)

_ 2(4.8%)

42(100%)

3.01-5

Lakh

1(50%)

1(50%)

_ _ _ 2(100%)

Above 5

Lakh

3(100%)

_ _ _ _ 3(100%)

Total 40

(52.6%)

24

(31.6%)

8

(10.6%)

2

(2.6%)

2

(2.6%)

76

(100%)

Interpretation:

In case of bonus and interest paid by the insurer company, we can see that people who

belong to the income groups of 1.01 – 3 lakh, 3.0 –5 lakh and above 6 lakh put more

emphasis on this in comparison to the people who have income less than 1 lakh. The

reason for the same may be due to the fact, that people who belong to the range of 1-

6 lakh as annual income, have an tendency to earn more than what they are earning

and that’s why they think it as highly important criterion, On the other hand people

who have income less than 1 lakh, do not have such income to invest in the company

( more emphasis is given by them on the safety of the money) and that is why they

don’t put so much importance on bonus and interest paid by the company.



Chart-2.33

Annual Income – Bonus and Interest Paid

Income-Bonus&Interest

13

23

1

3

8

15

1

0

6

2

0

0

2

0

0

0

0

0

0

0

0% 20% 40% 60% 80% 100%

Below 1 Lakh

1.01-3 Lakh

3.01-5 Lakh

Above 5 Lakh


Respondents

5

4

3

2

1



Table-2.34

Annual Income – Services (Both pre and post sales)

Annual

Income(Rs)

5 4 3 2 1 Total

Below 1

Lakh

12(41.4%)

11(37.9%)

4(13.8%)

_ 2(6.9%)

29(100%)

1.01-3

Lakh

12(28.6%)

21(50%)

7(16.6%)

2(4.8%)

_ 42(100%)

3.01-5

Lakh

_ 2(100%)

_ _ _ 2(100%)

Above 5

Lakh

2(66.7%)

1(33.3%)

_ _ _ 3(100%)

Total 26(34.2%) 35(46.1%) 11(14.5%) 2(2.6%) 2(2.6%) 3(100%)

Interpretation:

Now if we consider the services provided by the company we can see that the

people who are having less income put more emphasis on this criterion (41.4%)

because people are more conscious about their money than the people who belong

to 1-3 lakh. So, they expect better services for their money even though It is less

and among all respondents above 6 Lakh who have more job responsibility think

service as a highly important criterion for decision making.



Chart-2.34

Annual Income – Services (Both pre and post sales):

Income-Services

12

12

2

2

11

21

0

1

4

7

0

0

0

2

0

0

2

0

0

0

0% 20% 40% 60% 80% 100%

Below 1 Lakh

1.01-3 Lakh

3.01-5 Lakh

Above 5 Lakh


Respondents

5

4

3

2

1



Table-2.35

Annual Income – Accessibility

Annual

Income(Rs)

5 4 3 2 1 Total

Below 1

Lakh

9(31%)

19(65.5%)

_ 1(3.5%)

_ 29(100%)

1.01-3

Lakh

10(23.8%)

25(59.5%)

6(14.3%)

1(2.4%)

_ 42(100%)

3.01-5

Lakh

1(50%)

1(50%)

_ _ _ 2

Above 5

Lakh

1(33.3%)

2(66.7%)

_ _ _ 3(100%)

Total 21(27.6%) 47(61.8%) 6(7.9%) 2(2.7%) _ 76(100%)

Interpretation:

If we consider the accessibility as one of the criterion for taking insurance policy, we

can see that as the income of the person increases, they put less importance on the

accessibility criterion (31.0% of people having income less than 1 lakh, 23.8% for

1.01 – 3 lakh, one respondent for 3.01 – 5 lakh and one respondent for more than 5

lakh). The same trend can be seen when they consider it as the only important criteria

in taking a decision regarding life insurance. So, most of the people think it as a

criterion which is not so important while taking their decision.



Chart-2.35

Annual Income – Accessibility

Income-Accessibility

9

10

1

1

19

25

1

2

0

6

0

0

1

1

0

0

0

0

0

0

0% 20% 40% 60% 80% 100%

Below 1 Lakh

1.01-3 Lakh

3.01-5 Lakh

Above 5 Lakh


Respondents

5

4

3

2

1



Table-2.36

Annual Income – Company Image

Annual

Income(Rs)

5 4 3 2 1 Total

Below 1

Lakh

16(55.2%)

9(31%)

3(10.4%)

1(3.4%)

_ 29(100%)

1.01-3

Lakh

23(54.8%)

13(30.9%)

6(14.3%)

_ _ 42(100%)

3.01-5

Lakh

1(50%)

1(50%)

_ _ _ 2(100%)

Above 5

Lakh

1(33.3%)

2(66.7%)

_ _ _ 3(100%)

Total 41(53.9%) 24(31.6%) 10(13.2%) 1(1.3%) _ 76(100%)

Interpretation:

The above table shows 41 respondents of all the income level with average of 54%consider company image as highly important criterion. When we compare companyimage among different age groups and annual income groups we find similar opinion,considering that it is highly important for decision making. This mainly because

people feel safe and secure with the company they invest.



Chart-2.36

Annual Income – Company Image

Income-Company Image

16

23

1

1

9

13

1

2

3

6

0

0

1

0

0

0

0

0

0

0

0% 20% 40% 60% 80% 100%

Below 1 Lakh

1.01-3 Lakh

3.01-5 Lakh

Above 5 Lakh


Respondents

5

4

3

2

1

So, to conclude it can be said that in most of the aspects, the opinion of the

people belonging to different income groups differ from each other. The reason for

the same can be the importance that they give on the sum they invest in taking a life

insurance policy i.e. a person who is having income of less than 1 lakh will put more

emphasis on a sum of Rs, 10000, in comparison to a person who is having an income

of more than 5 lakh. So, the difference in income does show difference in opinion

also.



2.8 To find whether gender bias influenced for investing in life insurance

Table given below shows the data obtained during study of life insurance

Source: Primary data

Null Hypothesis

(Ho): There is no gender bias for investing in insurance

Alternative Hypothesis

(H1): There is gender bias for investing in insurance.

Chi square test

Factor Level of

significance

Degree of

freedom

Table value Chi square

Gender 5% 1 3.84 1.059

Result:

Chi square is less than the table value.

Hence accept the null hypothesis (Ho)

We can conclude that gender bias doesn’t influence for investing in life insurance.

Having

insurance

Not having

insurance

Total

Male 47(44.84) 12(14.16) 41

Female 29(31.16) 12(9.84) 59

Total 76 24 100



CHAPTER III

FINDINGS, SUGGESTIONS AND CONCLUSION

3.1 FINDINGS

The findings that can be drawn from the survey conducted by us can be summarized

in the following way:

a) Bank Deposits are the most preferred investment alternative which is available

to people followed by alternatives such as Insurance, Real Estate, Gold and

Silver, Mutual etc.

b) It was found that 61 respondents were willing to take a life insurance under

LIC and 33 respondents under ICICI Prudential Life Insurance.

c) Among the 76 insurance holders 63 have policy of LIC whereas only 11

respondents have policy of ICICI Prudential Life Insurance.

d) Only 47% of the total respondents are aware of the joint venture between

ICICI bank with Prudential of UK to form a company called ICICI Prudential

Life Insurance in the year 2000. 22 respondents are interested to invest in

ICICI because of the company’s growth potential and brand image that ICICI

has.

e) The scheme mostly preferred by insurance holders was life protection schemes

like death benefits followed by money growth plans like wealth creation and

high return plans.

f) It was found that nearly 50% of the respondents usually save less than 15%

and the kind of investment mostly preferred by the respondents were both long

and short term.

g) According to the survey safety is the most important criterion which is

excepted among all the respondents towards their investment alternatives

followed by Return, Brand Name, Tax Benefits, Liquidity and Capital Growth.

h) According to the study company image is to be the highly important criteria

which we consider before taking up a life insurance this is mainly because

people expect safety and security for their money which they invest, followed

by the factor Premium which we pay to the insurer and then Bonus and

Interest paid by the company, services etc.

i) People who belong to different age groups have different perception regardingthe most important criteria before taking the decision on a life insurance

policy.



j) People who belong to different income groups also have different perception

regarding the important criteria concerned with the life insurance.



3.2 SUGGESTIONS

1. Consumer should be aware of company’s profile and returns associated with

insurance.

2. The Financial advisor should be right enough to serve the consumers. The

consumer

should also be aware of the advisor or others who is looking after their investments.

3. Company should publish their performance by comparing it with their competitors.

4. Company should adopt strategies to explore that private insurance companies are

safer and securer than public insurance company like LIC.

5. Middle income people suggest that premium can be collected on monthly basis

instead

of twice a year.

6. Company’s reputation is more important because bad impression on image or

brand name is considered while decision making among consumers.



REFERENCES

TEXT BOOKS

1. PHILIP KOTLER (2001) ‘Marketing Management’, Prentice HallPvt.Ltd., New Delhi, Millennium edition.

2. KOTHARI C.R. (1999) ‘Research Methodology’, Wishwa Prakashan, New Delhi, 2nd edition.

3. LEON G. SCHFFMAN and LESLIE LAZAR KANUK (2007)‘Consumer Behavior’, Prentice Hall Pvt.Ltd., New Delhi, 9 th edition.

WEB SITES

1. www.iciciprulife.com

2. www.irda.org

http://www.irda.org/

http://www.irda.org/



APPENDIX

A Study of Consumer’s Perception about Life Insurance with special Reference

to Birla Sunlife

Questionnaire

Dear respondent,This questionnaire is aimed at understanding your perception about life insurance.Your response will be dealt with strict confidentiality and it will be used only for academic purpose. Thank you for spending your valuable time to fill thisquestionnaire.

1. Name: Gender: Male Female

Contact No:

2. Age Group:

3. Educational Qualification:

4. Occupation:

5. Annual Income Level:

6. What percentage of your Salary do you usually save?

7. What kind of investment do you prefer?

8. Rank these various investment alternatives according to your preferences.

41-50

Above 60

Below 30 31-40 51-60

Under Graduate Diploma

Others (Specify)………….

Post Graduate

Student Self-Employed

Others (Specify)………….

Employed

Below 1 Lakh 3.01-5 Lakh

Above 5 Lakh

1.01-3 Lakh

Less Than 15% 20-25%

Greater Than 25%

15-20%

Short Term BothLong Term



9. State your expectation on investment alternatives by ticking according to its

importance.

SNO Investment Alternatives Rank

1. Bonds & Debentures

2. Equity/Shares

3. Mutual Fund

4. Public Provident Fund(PPF)

5. Post Office

6. Insurance

7. Bank Deposits

8. Real Estate

9. Gold & Silver

10. Other (specify)…………………….



Money growth plan

10. Do you have life Insurance Policy? ( If ‘NO’ then please go to question no.14)

11. If ‘Yes’ Which Insurance Company Policy do you have?

12. What scheme of Insurance Policy have you taken?

13. What parameters do you look into before you take up a life insurance Policy?And tick the following parameter according to your importance.

Parametersconsidered beforeinsurance policy

Highly

Important ImportantNeutral Least

Important NotImportant

Premium

Charges

Policy Term

Rider Benefits

Expectations oninvestment

Highlyimportant Important Neutral

Leastimportant

Notimportant

Safety

Capital Growth

Liquidity

Return

Tax Benefit

Company Profile &Brand Name

Yes No

LIC Reliance lifeBajaj Allianz

Birla Sunlife Prudential Others (Specify)……..HDFC Standard

Life protection plan Retirement planEducation plan

Health plan Others (Specify)……….



Bonus & Interest

Services (Pre &Post Sales)

Accessibility

Company Image

14. Are you aware about the joint venture between ICICI bank with PrudentialPlc of UK to form a first private sector insurance company called ICICIPrudential Life Insurance in December 2000?

15. Would you like to invest in ICICI Prudential Life Insurance?

16. If, ‘YES’ what will make you to invest in ICICI Prudential Lifeinsurance?

17. Among the following Life Insurance Companies in which companyyou will be Willing to take a life insurance?

18. Suggestions _______________________________________

________________________________________________

________________________________________________

Thank you

Yes No

Yes No

Brand image Diversity

Transparency

Utmost Good Faith

Growth Potential

Others (Specify)…………….

Bajaj AllianzBirla Sunlife

HDFC Standard Life

SBI Life TATA- AIGICICI Prudential

Reliance Max New York Met Life

Sahara ING Vysya Aviva Dabur

OM- Kotak Mahindra LIC AXA-Bharti

ING Vysya

Max New York Max New York

1111111111 insurance as investment

Documents